Comparative Review of the Taxation of the Persons Who Profit from the Sale of Real Estate in France and in Lithuania

Gintarė Grambaitė, Jean-Philippe Brunet

Abstract

This paper analyzes the Real Estate sales process from the point of view of taxation in Lithuania and in France. The authors focused on the most relevant and debatable legal issues in their opinion which impact the status of the individuals selling their dwelling located in one of these countries, and the impact on the tax regulations on the property owner‘s behavior. The first part deals with profit taxation systems and their differences in both France and Lithuania. The authors analyze the legislative regulation and implementation problems, the compliance of the regulation with the European Union provisions for the taxation purposes, submit proposals for regulatory improvement. They analyse the scope of taxation of profit gained from the sales of real estate which are made by a natural person, also the effect of the real estate sales over-taxation on Lithuanian and French residents’ behavior. It should be noted that the authors of the article provide a number of tables that visually show the tax burden impact on the state‘s economy and the real estate owner‘s behavior. It should be noted that for the analysis of profits taxation issue, one of the most important questions is whether the individual is a resident of a country where such a fee is paid. As provided by the international treaties, double taxation could be avoided, but because of the many exceptions the application of such treaties is not quite clear. It should be noted that Lithuania stands out from other European Union countries in real estate taxation because the tax system is not such an immense burden on a citizen as it is in France. It can be argued that in taxation of real estate, it is necessary to take into account the application of the principle of fairness in tax law, and the state economic goals.

Keywords

profit; real estate; tax; European law harmonization; a taxable person; a person exempted from paying the tax; real estate transactions